British Gas energy bills to rise by 6% in November

As if we didn’t need any further reminder that winter is just around the corner, the country’s biggest energy provider has just announced plans to raise their gas and electricity prices.

Late yesterday the news broke that British Gas customers will see their gas and electricity bills rise by 6% on November 16; a price increase which is set to add around an extra £80 to an average households annual dual fuel bill.

Although British Gas hasn’t raised its tariffs for over a year – back in August 2011 the provider increased its gas and electricity costs by 18% and 16% respectively – the news will still come as a blow to customers already struggling to meet escalating living costs, particularly the elderly and other vulnerable members of society who are already worried about paying their heating bills.

British Gas blames the decision on rising wholesale gas prices which the company expects will climb by 13% over the winter period. The company is the second energy provider to increase their tariffs in time for winter. Rival SSE revealed back in August that their customers would endure a 9% hike for their electricity and gas, which will come into force next week (Oct 15) and hit around 8.4 million gas and electricity customers.

“Britain’s North Sea gas supplies are running out, and British Gas has to pay the going rate for gas in a competitive global marketplace,” said Phil Bentley, managing director for British Gas. “Furthermore, the investment needed to maintain and upgrade the national grid to deliver energy to our customers’ homes, and the costs of the Government’s policies for a clean, energy-efficient Britain, are all going up.”

According to British Gas £50 out of the £80 will be put towards “non commodity” costs, which includes the cost of delivering energy to customers and meeting the Government’s environment policies like the Renewables Obligation and feed in tariffs. The remaining £30 will cover the cost of wholesale gas, operating costs and profit. For consumers, the increase means an average of £1.50 will be added to weekly bills and will effect some 8.5 million British Gas customers. Customers on fixed price tariffs – around 1 million of them – will no doubt be breathing a sigh of relief.

Speaking to the BBC, Richard Lloyd from consumer group Which? was highly critical of the move and said that everyone knows the energy market in the UK isn’t competitive and isn’t working efficiently for consumers: “What we need to see is action from the Government and more pressure on… these very big lazy companies who think it’s OK to clobber people with above-inflation price rises at the very time when they can least afford it.”

With both SSE and British Gas increasing their tariffs, the four remaining ‘Big Six’ (EDF, E.ON, npower and Scottish Power) are bound to follow in their footsteps. It’s just a matter of when, not if.